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Suppose that the above bank also owns a $1 million par-value Treasury bond, pur-chased at par, with two years to maturity, paying $29,000 in semiannual
Suppose that the above bank also owns a $1 million par-value Treasury bond, pur-chased at par, with two years to maturity, paying $29,000 in semiannual interest,with a market value of $960,000. Determine the incremental cash-flow effects if thebank sold this note and bought a two-year taxable security yielding 6.2 percent withthe proceeds.
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